Lack of knowledge about the availability, quality and compatibility of low-sulphur fuels is pushing up uncertainty in shipping markets and the likelihood that bunker prices will spike around the transition to IMO 2020.
Shipowners are finding it hard to get the in-depth information about the 0.5% fuels that they need, argue the experts at the International Chamber of Shipping (ICS).
Across the bunker and shipping industries, the advice is that the new fuels will not be a largely homogeneous product, unlike 3.5% residual fuel, and there will be big variability in the recipes used to create 0.5% blends. Oil industry sources warn about mixing grades.
Quality concerns have led the ICS to give blanket advice to operators to look at burning distillate fuels until the situation sorts itself out. But that is likely to cause a huge price spike for marine gasoil (MGO) and in turn 0.5% fuels, because the blends include the distillate.
The ICS senior technical adviser on 2020, Sunil Krishnakumar, tells TW+: “ICS thinks owners could consider running on distillates for long enough for the market to equalise itself and there to be a dependable supply of quality low-sulphur fuels.”
But he accepts that if many owners take that approach, the price of MGO will probably soar. And for a lot of ships it is not an option to run on distillates long-term because of the way fuel heating systems and tanks are arranged.
“Compatibility is not a new issue. But the way these new fuels are blended, it becomes harder to confidently measure if two grades are compatible,” Krishnakumar cautions, adding that no tools currently exist for measuring their compatibility, although the International Organization for Standardization (ISO) is working on one.
It has become apparent that even if fuel is bought from a single supplier at a single port, the grades may not be compatible at different times, he warns.
ExxonMobil marine fuels venture manager Luca Volta advises that mixing incompatible fuels can cause “issues such as precipitation in tanks leading to the fuel system and therefore potential formation of sludging and filter blocking, leading to the potential scenario of fuel starvation at the engine”.
Unni Einemo, the International Bunker Industry Association representative to the IMO, says the association has seen owners taking a much deeper interest in the fuels they are buying, and asking many more questions. Years of operating emission control areas means many operators already know a lot about switching from burning heavy fuel oil to MGO.
“Already, thankfully, a large share of the market has this experience in managing switching the main engine between two very different types of fuel,” she says. “But even if the fuels meet ISO 8217 spec, you still have to watch very carefully the nature of the fuels you have going onboard.”
Volta says ExxonMobil’s 0.5% fuels will be compatible with each other on an 80-20 basis or 20-80 basis, but not on a 50-50 basis. Even mixing distillates can lead to problems from varying cold-flow properties arising from the different chemistries of base fuels and refining processes.
Total Marine Fuels Global Solutions managing director Jerome Leprince-Ringuet says concerns include compatibility, stability, cold flow properties, viscosity, contaminants and flashpoints. “We can say that we know where the traps are, and we are not falling into these traps. They are manageable through complying strictly with the current ISO specification.”
But although the standards organisation says new fuels will meet its current ISO 8217, it has accepted that further guidance is required on specific issues, the main one being compatibility. That guidance will be given before the next full revision as a publicly available specification.
Contamination becomes a greater risk, too, with blended stock fuels. Iain White, global marine field engineering services manager at ExxonMobil Aviation and Marine Lubricants, says the experience of operating emission control areas since 2015 led to an increase in catalytic fines contamination that can block filters and cause catastrophic cylinder damage. Cat fines are hard ceramic compounds used as a catalyst in the oil refining process.
“If the level is high coming onboard, that brings an immediate danger to the vessel,” White says. Over time, cat fine levels in a tank can also precipitate out during storage and “come back to bite the ship operator when the vessel goes into bad weather and the tanks get agitated”. Distillates used to clean fuel systems or tanks can carry cat fines and sludge through, so flushed fuel needs to be scrapped.
Variable viscosity, though, may not be as much of a headache, Krishnakumar says, “as long as it is within the ISO standard and ships are given advice about the range of viscosity”. Then the engineers onboard simply need to adjust the fuel heating systems accordingly.
Leprince-Ringuet agrees: “Tomorrow the value is in the sulphur, not the viscosity. We will blend to the sulphur spec of 0.5%, and viscosity is irrelevant to that process unless there is a contract specifying viscosity, which will come at a premium. We think that variable viscosity can be managed on the vessel.”
But everyone is warning: be prepared.
“I say to shipowners: try to contract as early as possible, build a relationship with a supplier, get a commitment from them on quantity and then bunker full,” says Adrian Tolson, senior partner at 20|20 Marine Energy. He likens it to buying fuel for your car — you do not buy a few litres, then drive down the road to the next petrol station for a cheaper price. It will be worth buying as much marine fuel of a known quality as possible, as it might not be available at the next port.
Mark Williams, managing director of Shipping Strategy, is among the many advising to use the new Bimco and Intertanko bunker clauses. “Be prepared for eventualities if things go wrong. Shipowners need to war-game what might happen now. Call their charterers now about what to do if, for example, a ship is arrested while allegedly non-compliant fuel is being tested and it is likely to miss its laycan.”
Post-2020 will be a multi-fuels future and knowledge of sourcing and grades will be vital. White warns it is essential that shipmanagers understand what fuel they have onboard and what’s going on in the engine. “You are effectively flying blind if you don’t have a fuel-monitoring programme.”